To be exempt from sales tax when buying items for resale, every Vermont seller needs a resale certificate, which is also known as an exemption certificate. A resale certificate states that you intend to resell the items you buy and collect sales tax from customers.
Below we will dive more into what a resale certificate is and how to obtain one in Vermont.
What Is a Resale Certificate?
A resale certificate is a document that exempts a seller from paying sales tax when buying items for resale. Most states recognize some form of a resale certificate.
As a Vermont small business owner, or someone selling to the residents of Vermont, you are generally required to collect sales tax from customers and pay sales tax when buying items. With a resale certificate, however, it is possible to purchase wholesale items without needing to pay sales tax on the transaction. The only time that sales tax is charged is when the items are later resold on a retail basis.
A resale certificate claims that the state of Vermont recognizes your business as a valid entity and that a wholesaler does not need to collect any sales tax from you because you promise to resale the items you buy.
Who Needs a Vermont Resale Certificate?
Any business that purchases physical merchandise in Vermont for resale purposes must deliver a valid resale certificate to the seller. Failure to provide a resale certificate, or providing one with falsified information, can expose your business to penalties imposed by the state, including repayment of the sales tax that was not collected at the time of the transaction.
What Are Other Names for a Resale Certificate?
In the state of Vermont, these documents are officially called “exemption certificates.” Other states have different names for it, and it is common to use these terms interchangeably. Resale certificates may also be called:
- Wholesale certificate
- Sales and use tax certificate
- Sales tax exemption certificate
- Reseller’s certificate
- Exempt sale certificate
How Do I Obtain a Resale Certificate in Vermont?
To obtain a Vermont exemption certificate, you need a seller’s permit, also called a sales tax permit. The seller’s permit shows that your business has the legal authority to sell goods and services to Vermont residents and collect sales tax. After getting your sales tax permit, you can obtain and fill out a resale certificate as needed.
How to Get a Seller’s Permit in Vermont
A Vermont sales tax permit allows you to sell taxable goods and services to Vermont residents and to collect sales tax on these transactions. It is also called a seller’s permit or a sales tax license.
When you obtain this permit, you also get a sales and use tax account number, which you need to provide when filling out your Vermont resale certificate.
To get a seller’s permit, you need to register for a business tax account with the Vermont Department of Taxes. FastFilings offers the easiest way to register for one of these accounts—see below for more information about our services.
Filling Out a Vermont Resale Certificate
After you have a seller’s permit, you can fill out the Form S-3 certificate of exemption. This can be downloaded free of charge from the Vermont Department of Taxes website. (Note that you might need one of the other forms listed on the site if you are engaged in certain types of business transactions.)
You will need to provide some information about your business, including:
- Name of your business
- Business address
- Business description
Then, fill out a description of the goods you want to buy for resale and the name and address of the seller’s business. Select “Multiple purchases” if you frequently buy the same goods from the same wholesaler.
Input your sales and use tax account number. Select the reason for applying for an exemption. You will most likely select “for wholesale/resale” before submitting the form.
Once you have completed the certificate, present it to the seller, who will verify it and exempt you from paying sales tax on the transaction(s) in question.
Do Vermont Resale Certificates Expire?
No, Vermont resale certificates do not expire. The seller is expected to keep a certificate on file for three years.
Additionally, a wholesaler does not have to collect a resale certificate at the time of the purchase. But the seller has to receive the resale certificate within 90 days of completing the sale.
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